The ruling on banks that give loans with yearly interest

All praise is due to Allâh alone. To proceed:

The Permanent Committee for Scientific Researches and Religious Verdicts reviewed the current request from the General Secretariat of Senior Scholars Board for a ruling particularly regarding the question of a questioner about two issues. One of them is what he mentioned concerning a bank that was established in their country and it gives those who hold shares in it loans with yearly interest at the rate of 6% until the loan is repaid. The questioner asks about the correctness of that. The second question is concerning the ruling of circumcising girls and whether it is recommended or disliked.

After the Committee's study of the request for a ruling, it responded to the first question by saying that the transaction with the bank that is mentioned in the question is a forbidden transaction. It combines Riba Al-Fadhl and Riba An-Nasi'ah. It is Riba Al-Fadhl because the person takes 1,000 from the bank, for example, and he gives the bank 1,060 in return. It is Riba An- Nasi'ah in that he takes 1,000 from the bank today and he gives the bank 1,060, for example, after a year. This is based upon what Ahmad and Muslim recorded from 'Ubadah bin As-Samit that the Prophet said:
"Gold for gold, silver for silver, wheat for wheat, barley for barley, dates for dates, salt for salt, like for like (in measure), and hand to hand (i.e., paid on the spot). If these types of items differ then sell however you wish, as long as it is hand to hand (i.e., paid on the spot)."

The point of proof in this that proves the forbiddance of this transactions and that it combines Riba Al-Fadhl and Riba An- Nasi'ah is that the bank gives the borrower a type of money and stipulates a condition upon him that it must be returned after a period of time with an increase. This increase is subject to the period of time that precedes its payment. The Messenger of Allah said, "Like for like (in measure) and hand to hand (i.e., paid on the spot)." Thus, this transaction is opposed to his command concerning that. Ibn Al-Munthir mentioned that there is a consensus (Ijma') among the people of knowledge that if the person gives a loan and stipulates an increase or gift on the borrower, then this is a type of Riba.

The Committee responded to the second question by saying that circumcising women is legislated for them as something that is recommended. This is due to what Al-Khallal recorded with his chain of narration back to Shaddad bin Aws that the Prophet said:
"Circumcision is a Sunnah for the men and an honor for the women."

And success if from Allâh. May Allâh send blessings and peace upon Muhammad, his family and his Companions.